Social performance: Labour

LA1 Total number and rates of new employee hires and employee turnover by age group, gender and region

Partially reported

We do not currently collate this information for all Group employees, but are able to do so for management-level employees as detailed below:

  New hires Total turnover Voluntary turnover
  2015 2016 2017 2015 2016 2017 2015 2016 2017
Americas 122 83 99 291 307 261 152 160 147
Asia-Pacific 272 282 301 501 475 404 304 262 258
Eastern Europe. Middle East and Africa 177 169 215 584 516 472 275 198 227
Western Europe 192 225 268 310 311 295 144 116 113
UK Headquarters and global IT 87 98 245 189 149 178 55 57 72
Total1 850 857 1,128 1,875 1,758 1,610 930 793 817
% of total management population 8% 8% 10% 17% 16% 14% 8% 7% 7%

Skilled and engaged talent is a critical source of competitive advantage for our business. It drives innovation, customer value, creates growth opportunities and mitigates risk. Employee retention for management-level employees is one of the key metrics on our Global Talent Dashboard for measuring the performance of our Talent Strategy. This includes measurement of total, voluntary, high potential and sustained high performer turnover.

We work to retain the best talent by offering highly competitive rewards for success, investing in world-class training and development, offering truly international career opportunities and the right critical experiences - driving high performance and the development of leadership capabilities to help our people realise their full potential.

Additionally, we are also having success in retaining our very best female talent, with turnover of senior women reducing dramatically from 15% in 2013 to less than 6% in 2017.

Our employee engagement survey, ‘Your Voice’, conveys the pride which many employees have in working for us and is demonstrable as we have continued to see employee turnover stay below comparator benchmarks.

BAT is committed to develop and promote employees from within the organisation and, in 2017, over 92% of our senior appointments were drawn from people already within the business – moves that have helped to deliver stronger and more diverse leadership teams and succession plans.

1We have updated the previously reported 2016 figures of total new hires of 685; total turnover of 1,758; and voluntary turnover of 591, due to improvements in our reporting methodology.

LA2 Benefits provided to full-time employees that are not provided to temporary or part-time employees, by significant locations of operation

Not reported – information not collated at Group-level

Our Employment Principles make clear our strategy of ensuring that our reward levels are highly competitive within the local area, and we are confident that through regular external benchmarking with comparator organisations, we remain a generous benefit provider.

You can download a copy of our Employment Principles at www.bat.com/principles .

LA3 Return to work and retention rates after parental leave, by gender

Not reported – information not collated at Group-level

LA4 Minimum notice periods regarding operational changes, including whether these are specified in collective agreements

Partially reported

Our Employment Principles make clear that, where restructuring is necessary, we are committed to doing so in a responsible manner. Where such situations do occur, our companies adopt responsible local approaches and procedures to address each instance, including severance pay and any other measures as may be appropriate to the situation and location, including outplacement support to help displaced employees to find alternative employment.

You can download a copy of our Employment Principles at www.bat.com/principles .

LA5 Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs

Not reported – information not collated at Group-level

LA6 Type of injury and rates of injury, occupational diseases, lost days and absenteeism, and total number of work-related fatalities, by region and gender

Partially reported

  2015 2016 2017
Total number of incidents reported2 187 184 217
Of which, accidents to employees and contractors 181 182 217
Of which, fatalities to members of the public involving BAT vehicles 6 2 11
Total number of serious injuries and fatalities2 55 58 85
Of which, serious injuries to employees 34 30 38
Of which, employee fatalities 0 2 1
Of which, serious injuries to contractors 8 20 24
Of which, contractor fatalities 7 4 11
Total number of fatalities to members of the public involving BAT vehicles 6 2 11
Lost workday cases2 166 155 181
Lost Workday Case Incident Rate (LWCIR) 0.26 0.24 0.28
Occupational illness rate 0.003 0 0

We are committed to a safe working environment for all our employees and contractors worldwide and have a Group-wide goal of zero accidents.

In 2017, accidents to employees and contractors across the Group increased significantly, from 182 in 2016, up to 217. Sadly, this included an increase in fatalities, with the death of a contracting electrician in our factory in Bangladesh from contact with electricity; two TM&D contractors who died in road traffic accidents in Brazil; and one TM&D employee and eight TM&D security contractors who died in violent attacks in Brazil and South Africa. Eleven members of the public also lost their lives in road traffic accidents involving BAT vehicles in eight countries.

We deeply regret this loss of life and the suffering caused to friends, family and colleagues. We liaise closely with the relevant authorities and conduct our own detailed investigations to determine the root cause of each accident, identify any lessons that can be learned and implement action plans, the outcomes of which are reviewed at Board-level.

For example, following the road traffic accidents, we examined telematics data to help identify the circumstances and cause of the accidents, refreshed and reinforced driver training programmes, introduced periodic driving skills tests, updated routes and risk assessments, and equipped vehicles with new technology, such as dashboard cameras. Where the investigation found our driver to be at fault, we also took appropriate disciplinary action.

The fatalities from armed robberies in Brazil and South Africa were concentrated in the first few months of the year and appeared to be planned and coordinated attacks involving high-grade weaponry – the scale of which we had not seen before. We immediately established comprehensive reviews and action plans in response, led by a cross-functional team involving Group Security, TM&D and EHS.

One issue identified was the high visibility of the security escorts which drew a lot more attention, so we revised our approach. We reduced the amount of stock the reps carry to make it less valuable, and implemented extra security to our route planning and vehicle tracking systems to ensure the details couldn’t be monitored by the gangs to plan attacks. These measures appeared to pay off, as we saw a significant reduction in armed robberies in the following months.

Unfortunately, though, at the very end of the year, one of our employees in Brazil got caught in a random shooting while driving, in which he lost his life. This makes the role of our ongoing training and awareness programmes even more important, to make sure our reps stick to approved routes and fully understand the changing risk environment.

Overall, our driver and vehicle safety programmes have led to a decline in road traffic accidents in 2017 involving cars or vans, but this was offset by a rise in accidents involving motorcycles, which are increasingly used in markets where the high density of traffic means they are a more practical option. To address the increased risks, we have put in place motorcycle training programmes in all markets where motorcycles have been recently introduced, to provide practical techniques for different road conditions and types of traffic, safe speeds and distances, and how to spot a potential problem and take action to deal with it safely.

Please refer to the data scope page to find out more about the definitions for and reporting scope of our Health and Safety data, as well as calculation methods applied.

2To include reportable injuries from our 2015 and 2016 acquisitions, we have updated the following previously reported figures: total accidents of 175 for both 2015 and 2016; lost workday cases of 160 in 2015 and 151 in 2016; serious injuries to employees of 31 in 2015 and 33 in 2016; and serious injuries to contractors of 9 in 2015 and 16 in 2016. The latter two also include a reclassification of a 2015 serious injury from a contractor to an employee. Additionally, an internal audit identified three lost workday cases to independent contractors, who  were not under BAT’s direct supervision and control, as incorrectly reported in 2016 under serious injuries – we have updated the 2016 data to reflect this reclassification in line with our definitions.

 

LA7 Workers with high incidence or high risk of diseases related to their occupation

Partially reported

While we do not directly employ tobacco farmers or farm workers, tobacco growing is a significant part of our supply chain for which green tobacco sickness (GTS) is a risk. GTS is a type of nicotine poisoning caused when nicotine is absorbed through the skin from wet tobacco leaves. It’s a real risk to farmers and their workers if they harvest tobacco when it’s wet.

Our business is actively working to improve its understanding of GTS. We believe that education is key and that tobacco workers should be given practical guidance to better understand and avoid the risks of contracting the illness. Education programmes include information about risk factors, preventative measures, symptoms, diagnosis and treatment. For more information on our approach, please see www.bat.com/gts .

In addition, as a global business, we recognise that some of the countries in which we operate have a higher risk of communicable diseases. To address this, our markets implement Endemic Disease programmes aiming to reduce the impacts of diseases such as malaria, tuberculosis, HIV/AIDS and hepatitis on employees, their families and communities. It includes a range of interventions such as vaccination, peer education, workshops, water purification, nutrition and personal hygiene.

Our companies also have programmes to protect and promote health and wellbeing for employees, their families and local communities. These are particularly valuable in those parts of the world where local health authorities struggle to provide an adequate service and those that have higher risk of communicable diseases.

LA8 Health and safety topics covered in formal agreements with trade unions

Not reported – information not collated at Group-level

LA9 Average hours of training per year per employee by gender, and by employee category

Partially reported

We provide training for our employees at global, regional and local levels through our Group-wide learning and development programme.

This includes a diverse mix of learning based on a 70:20:10 methodology: 70% on the job learning, 20% learning from others through coaching and mentoring, and 10% formal online and classroom-based training.

We have a purpose-built development centre in the UK where international-level classroom-based training programmes are delivered. These bring together world renowned academic and business educators from diverse academic institutions around the world including the IMD Business School in Switzerland, the global INSEAD Business School, Wharton School of the University of Pennsylvania and Harvard University. The international programmes cover issues such as operations, business strategy, leadership, marketing, finance, and IT among others.

For our most senior women we also take part in the Women’s Leadership Development Programme, run in conjunction with INSEAD.

2017 saw the introduction of our new Global Graduate Academy  : an intensive two-week programme focusing on accelerating the development of commercial leadership in our next generation of leaders. Over two cohorts during the year, 108 global graduates from 37 countries came together in London for a challenging and interactive learning experience supported by senior leaders from across the business.

We continually update our capability frameworks and learning portfolio to enable development of new capabilities to drive business performance. In 2017, we launched new programmes across Leadership, Marketing, Legal and External Affairs and R&D. These included a new leadership programme for junior managers integrated with leading edge digital content and programmes focusing on brand-building and Next Generation Products.

Our Group Employment Principles  specifically cover learning and development and the provision of opportunities, and also emphasise the importance of personal responsibility for growth.

LA10 Programmes for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings

Partially reported

The quality of our people is a major reason why the Group continues to perform well. In return, we commit to invest as much time and energy in our people as we do our brands. The way our people operate is embodied in our four Guiding Principles: Enterprising Spirit, Freedom Through Responsibility, Open Minded and Strength from Diversity.

The long-term culture of the Group has been about developing talent from within, stretching and supporting the high-performing managers who will lead the delivery of our strategy. In 2017, over 92% of our senior appointments were drawn from people already within the business – moves that have helped to deliver stronger and more diverse leadership teams and succession plans.

To achieve this, we have a range of programmes in place to drive high performance the development of leaderships capabilities to help our people realise their full potential. See LA9 for details.

Away from the classroom, we also provide mentoring, coaching and sponsorship programmes and over the last four years have participated in the 30% Club Mentoring Programme, which provides external support for our senior women.

Our Employment Principles  make clear that, where restructuring is necessary, we are committed to doing so in a responsible manner. Where such situations do occur and where it is appropriate to do so, we provide outplacement support to help displaced employees find alternative employment.

Wherever possible, we avoid making employees redundant and provide continuing employment through redeployment and appropriate re-training. Where redundancy is unavoidable, our Redundancy Policy outlines the steps we take to protect the welfare of our employees and support their lifelong learning. This includes:

  • Paying compensation to give some financial protection during a period in which employees experience an unexpected loss of salary;
  • Outplacement support to assist in finding alternative employment, such as career analysis and coaching, CV and interview preparation, and identifying self-employment opportunities.

For those individuals whose roles will become redundant in the longer term, BAT retains a continuing commitment to their personal development. Performance appraisals and development planning continue as normal, and consideration is given to requests for formal training programmes.

Additionally, our Retirement Policy details how we support staff in their preparation for retirement. It outlines various arrangements which can be made to facilitate the transition from working to retired life. This includes a pre-retirement interview arranged approximately one year in advance of an employee’s retirement, covering issues such as pension arrangements, leave entitlement and sources of information and support. All employees who are within two years of retirement are also entitled to attend our pre-retirement course or one run by an external organisation.

LA11 Percentage of employees receiving regular performance and career development reviews, by gender and by employee category

Partially reported

Our performance management system is designed to support employees’ regular performance reviews, helping them track their performance against individual goals and their contribution to the Group’s values, strategy and ambitions.

It encourages employees and managers to think about performance management throughout the year, not only at the start and end of the annual cycle. Using a streamlined and logical approach to objective setting and assessment helps differentiate more clearly between those who are falling short, those who are meeting their goals and those whose performance is genuinely outstanding.

100% of management employees around the world are required to follow the performance management process and have access to our electronic performance management and career development systems. This process includes formal mid-year and year-end performance and career development reviews. It also encourages employees to think about performance management throughout the year and line managers to provide employees with regular feedback – not only at the formal review points.

Non-management employees set annual performance objectives and development plans using local systems as per local needs. In the UK for example we use a ‘job family’ appraisal system for all non-management employees. As different systems are used, this data is not tracked globally.

LA12 Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity

Partially reported

Our goal is to significantly increase  the representation of women and focus nationalities in senior management by 2020.

Percentage of women

  2015 2016 2017
Total Group employees3 27% 22% 24%
    All non-management employees3 25% 19% 20%
    All management employees3 33% 33% 34%
        Of which, junior management grades 35% 36% 36%
        Of which, middle management grades 30% 30% 32%
        Of which, senior management grades3 16% 16% 21%
Main Board3 31% 27% 31%

Over the last years, we have made significant progress with female representation at senior level. When we revised our focus on diversity in 2012, we started with a low base of 11% female representation in senior roles, due to the historical industry characteristics. In the last six years we’ve grown this significantly and now have 21% female representation at senior level.

You can view our goals and performance indicators on the Employee diversity and opinion page.

3Data for 2017 figures includes data from Reynolds American Inc., to ensure alignment with the gender diversity reporting in our 2017 Annual Report. For year-on-year comparison with historical data, excluding RAI, these are: 23% for Group employees, 20% for non-management grades, 34% for management grades, and 19% for senior management grades.

Focus nationalities

In 2016, we achieved 19% representation of focus nationalities from Asia, the Middle East, Africa and Eastern Europe in senior management roles. Over the last five years, we have filled 29% of senior roles with focus nationalities.

We have 144 different nationalities represented across our management population globally and six different nationalities on our Board of Directors. In 2016, we were recognised by a review into Ethnic Diversity of UK Boards, which ranked BAT in the top 20 of the FTSE.

  2014 2015 2016 2017
Percentage of focus nationalities in senior management grades 17% 18% 19% 20%

Operating in more than 200 markets, we already have a very diverse workforce in terms of nationality. In 2017, we had 143 nationalities working in management globally, and 20% of our senior management roles were filled by people from our focus nationalities.

LA13 Ratio of basic salary of women to men by employee category, by significant locations of operation

Partially reported

We are committed to treating all employees fairly across the world, including providing equal pay and equal opportunities to both men and women.

The UK is home to our global headquarters, where 77 different nationalities are represented; our global research and development (R&D) centre in Southampton, which has over 400 highly skilled specialists in areas such as biochemistry, genetics, toxicology, biotechnology and electronics; and our UK trading business based in Richmond. In total, BAT in the UK employs approximately 2,300 people across 11 different businesses, and one we consider as a significant location of operation.

In March 2018, we published our first Gender Pay Report  , in line with the UK legislation that came into force in April 2017, requiring UK employers with more than 250 employees to publish statistics around their gender pay gap.

We are confident that, at BAT, the amount we pay our employees for jobs of a similar grade or value is not impacted in any way by gender. This can be seen clearly when we examine the monthly salary received by men and women at each employment grade. However, we do have a “gender pay gap” as defined by the UK legislation. This is largely a reflection of having more men than women in senior roles and is something we are committed to addressing.

Based on the UK legislation definition, the mean pay gap for all our UK employees is 34% (which means that the average hourly wage for women is 34% lower than for men). The median pay gap is 36%. This differential is almost entirely driven by the fact that we have a higher proportion of males in senior roles and who, in general, have been in those roles longer than their female colleagues. The numbers are significantly impacted by our highest-paid employees, the Management Board, who are currently all men.

Salary gap by job grade for all UK employees*

Employment grade Pay gap
Total mean pay gap 34%
Grade A -10%
Grade B 3%
Grade C 4%
Grade D 3%
Grade E 4%
Grade F -1%
Grade G 5%
Grade H 2%
Grade I n/a
 
*The employment grades reported under LA13 correspond to non-management positions (Grade A), junior management positions (Grades B and C), middle management positions (Grades D and E) and senior management grades (Grade F to I), as reported under LA12. There are currently no women on our Management Board, at Grade I. 
 
Our Gender Pay Report  provides more detail and context around the data presented above.
 
 
LA14 Percentage of new suppliers that were screened using labour practices criteria

Fully reported

All our new and existing first-tier tobacco leaf and direct materials suppliers are screened using labour practices criteria as part of our supplier programmes.

We conduct due diligence on our tobacco leaf supply chain through the Sustainable Tobacco Programme  (STP), which assesses and monitors suppliers’ performance in meeting industry-wide standards, including key environmental criteria. The programme assesses first-tier tobacco leaf suppliers, including our own leaf operations, and checks if they have the appropriate systems, governance and procedures in place to ensure high environmental and human rights standards on the farms they source from.

Suppliers complete an annual self-assessment covering different criteria under the key areas of: crop, environment, people and facilities. The people criteria include: child labour prevention, safe working environment, fair treatment and preventing forced labour, freedom of association, and terms of employment.

AB Sustain, a supply chain management company, independently reviews the self-assessments each year, and conducts independent on-site reviews every three years. These include visits to tobacco farms and in-depth analyses of suppliers’ policies, processes and practices. STP was introduced in June 2016 to unify the industry under a single programme. By the end of 2017, 50% of our leaf operations and suppliers had on-site reviews by AB Sustain, and this will be 100% by the end of 2018.

In addition to tobacco leaf, the other direct materials we buy to make our products, such as paper and filters and the components that go into our Next Generation Products, represent our highest value strategic supply chain. All our direct materials suppliers have to undergo an independent on-site audit in order to be appointed as a supplier to BAT. They are then re-audited every three years.

The audits are conducted by Intertek – a highly respected global auditing company – and include criteria on forced labour, child labour, wages and hours, health and safety, environment and management systems. If any issues are identified, suppliers are required to implement corrective actions. Intertek verifies they have done so either through a desktop review, for moderate issues, or a follow-up audit for more serious issues.

In 2017, Intertek audits were conducted on a total of 65 direct suppliers in 29 countries, representing 20% of our total direct Procurement spend.

While we always try to use the results of any supplier assessment or audit to support our suppliers in improving their performance, if they are unwilling to engage with us, we will terminate the business relationship.

LA15 Significant actual and potential negative impacts for labour practices in the supply chain and actions taken

Partially reported

All our new and existing first-tier tobacco leaf and direct materials suppliers are screened using labour practices criteria as part of our supplier programmes, as described above in LA14.

In 2017, the following issues relating to labour practices in our supply chain were alleged, reported or identified:

Agricultural tobacco leaf supply chain

Following allegations made in 2016 by the Swedish NGO Swedwatch , regarding tobacco leaf growing in Bangladesh, in 2017, we commissioned the international sustainability and human rights consultancy DNV-GL to conduct a review of the tobacco leaf growing practices of our business in Bangladesh and against the allegations posed within the Swedwatch report. We are pleased that the outputs were consistent with the outcomes of our own investigations and that DNV-GL found no evidence to support the allegations, including claims of child and bonded labour.

Equally, we are grateful that the review highlighted some procedural and control issues that will further help us manage human rights risks in-country. BAT Bangladesh has already implemented a number of initiatives that will strengthen our approach, particularly around preventing child labour, bonded labour and gender discrimination.

The full report of DNV-GL’s review and details of our response and actions can be found at www.bat.com/humanrights/respond .

In May 2016, the NGO Human Rights Watch published a report entitled, ‘The Harvest is in My Blood: Hazardous Child Labor in Tobacco Farming in Indonesia’ .

The report into tobacco growing in Indonesia highlighted a number of issues that result from the way in which certain types of tobacco are traditionally grown and sold in the country. We are pleased that it acknowledges the collective responsibilities of the Government, the tobacco industry and NGOs, and we support many of the recommendations on how these groups can tackle this issue. The report findings have been fed into an existing review of our practices in Indonesia and have contributed to our ongoing plans.

For example, in 2017 our business in Indonesia continued its work with ECLT  on a multi-stakeholder project to address child labour in tobacco growing. This included developing a new collective strategy, involving national and local governments, farmers’ associations, tobacco companies, civil society, international organisations and development agencies.

In addition, there have been ongoing allegations of labour practice abuses on unspecified tobacco farms in our US supply chain, including concerns raised regarding migrant workers’ awareness of their rights for freedom of association and unionisation.

We have planned a supplier review, as part of STP, for 2018, which will include RJ Reynolds Tobacco Company in its capacity as a BAT leaf operation, following our acquisition in July 2017. Prior to this, in 2015, we brought forward an independent, on-site review of our US tobacco leaf suppliers. It found no evidence of any wrongdoing, but did highlight some areas for improvement, which the suppliers addressed.

We believe that the most effective and practical way of dealing with the issues is by encouraging all the parties in the US to get around the table and talk. This is why RJ Reynolds and other US suppliers have been participating with other stakeholders in the Farm Labour Practices Group, and together they are working on initiatives to improve workers’ experiences and promote compliance with the laws that protect workers’ rights.

Non-agricultural supply chain

In 2017, Intertek audits identified major issues relating to labour practices with two direct materials suppliers, both of which were immediately escalated to our Group Head of Direct Procurement.

The first related to a supplier in Malaysia, which was found to be storing the passports of all foreign workers. Intended for the purposes of safekeeping, the workers had all signed consent forms and could request the passports back at any time. However, there was no procedure in place to enable this. The supplier took corrective action to immediately return the passports to the workers and provide personal lockers for them to store their passports on site if they wished. Intertek revisited the supplier within three months and a 100% audit score was achieved.

In the second case, it was found that a supplier’s employees in Poland were not free to decline overtime and had received an official order from managers to work on days off. The supplier amended its policy to explicitly state that overtime is strictly voluntary and communicated this to the supplier’s management, for which all have signed written confirmation.

LA16 Number of grievances about labour practices filed, addressed, and resolved through formal grievance mechanisms

Fully reported

In the year to 31 December 2017, 43 instances of suspected improper business conduct contrary to our Workplace and Human Rights Policy in our Standards of Business Conduct , which covers labour practices, were reported to the Board Audit Committee. This included 39 brought to our attention through ‘whistleblowing’ reports from employees, ex-employees, third parties or unknown individuals reporting anonymously.

16 were established as breaches of our Respect in the Workplace Policy, and appropriate action was taken, including dismissal, disciplinary measures and strengthening our internal controls. The investigations for the other cases found no wrongdoing.

The Group’s Standards of Business Conduct  sets out the Group’s whistleblowing policy, enabling anyone working for, or within Group, in confidence (and anonymously where they wish), to raise concerns without fear of reprisal, including concerns regarding accounting or auditing matters. Employees can raise concerns with their line manager, HR or one of the Group’s Designated Officers for whistleblowing based locally throughout the world. Alternatively, they can use the confidential, independently managed external Speak Up  channels via telephone or internet which offers additional channels to raise any concerns or report any matter, and this can be done anonymously. Our Speak Up channels are available 24 hours a day in local languages and are highlighted in our internal training and communications. Our Speak Up portal is also available to business partners and suppliers.

The Whistleblowing Policy is supplemented by local procedures throughout the Group and in the Group’s London headquarters, which provide staff with additional guidance and enable them to report matters in a language with which they are comfortable. An example of local procedures is the UK formal Grievance Policy. It enables employees to raise issues with management regarding their work, working environment or working relationships, or about their employer’s, client’s, a third party’s or their fellow worker’s actions that affect them. Examples include: terms and conditions of employment, health and safety, relationships at work, new working practices, organisational change and equal opportunities. This policy sets out a global best practice for replication throughout the Group subject to local, end market jurisdiction.

The Board Audit Committee receives regular reports on whistleblowings.

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